Dilworth Trust Board v Attorney-General
[2017] NZHC 2987
•4 December 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2015-485-350 [2017] NZHC 2987
BETWEEN DILWORTH TRUST BOARD
Plaintiff
AND
THE ATTORNEY-GENERAL First Defendant
AND
THE CHIEF EXECUTIVE OF LAND INFORMATION NEW ZEALAND Second Defendant
AND
NEW ZEALAND TRANSPORT AGENCY
Third Defendant
Hearing: 21-30 June 2017 Counsel:
W L Aldred, J B Orpin-Dowell and P M Cassin for Plaintiff
J B Y Cheng and E N C Lay for First and Second Defendants
C I J Fleming and M J Neill for Third DefendantJudgment:
4 December 2017
JUDGMENT OF ELLIS J
DILWORTH TRUST BOARD v THE ATTORNEY-GENERAL [2017] NZHC 2987 [4 December 2017]
Table of Contents
Paragraph No.
Introduction [1] LEGAL CONTEXT
The Public Works Act 1981 [5] Definitions [6] The taking provisions [7] The offer back requirement [12]
FACTUAL CONTEXT [17] The Dilworth lands [18] A chronology of the acquisition process [24] Acquisition of leasehold interest in Lot 25 [27] Acquisition of leasehold interests in Lots 1, 2 and 3 [28] Acquisition of freehold interest in Lot 25 [30]
Acquisition of freehold interests in Part Lots 1–3,
Lots 12–16 and 22–24 [38]
Change in Crown Policy and the Memorandum of
Agreement with Dilworth [44]
The offer backs [52]
1983 offer backs [53]
1989 offer back [55] Acquisition of lands for the replacement project [57] Westfield [63] Robertson [67]
5 Mahuru Street [68]
NZTA’s post-construction intentions for the Viaduct lands
and its interactions with Dilworth [71]
The Opus Land Protection Review [83] SHMT decision [89] The VAC decision [103] Consultation on the Master Plan [105] The revised Master Plan [109] The 2013 draft lease [112] Developments leading to these proceedings [115] Post commencement developments [118]
The evidence about what land access is needed to
inspect and maintain the Viaduct? [124]
DISCUSSION [131] Is the Dilworth land being held for a public work? [134] Is the land no longer required for that public work purpose? [135] Section 40(1)(b) – is the land required for another public work? [156] Section 40(1)(c) [162] Section 40(2) – exemptions to the duty of offer back [163] Result [165]
Introduction
[1] In 1841, a young James Dilworth arrived in New Zealand from Ireland. Over the next few decades he became a farmer and a significant landowner in Auckland. At the time of his death in 1894, James Dilworth’s estate was worth in excess of £100,000, and was comprised substantially of real property. In his Will, he left almost all his very significant residuary estate for the establishment of a school for the sons “of persons of good character of any race in straitened circumstances” so that they might become “good and useful” members of society. The Will set out in great detail a series of directions regarding establishment of the school. It did not confer upon the Trustees any power to sell the lands vested in them, and gave specific directions as to the terms upon which the land could be leased.1 The Dilworth Trust Board (Dilworth) was established on 23 December 1894 and Dilworth School opened in 1906.
[2] Almost 125 years after James Dilworth’s death, the school bearing his name continues to operate in the way envisioned by him, although it now has three campuses.2 The school’s ongoing and very considerable overheads continue to be funded by income derived from its extensive landholdings, which are principally in the metropolitan Auckland area.
[3] Virtually since its establishment, however, Dilworth has had significant areas of its land acquired by the Crown under public works legislation. Included in that which has been taken are several parcels of land (the Dilworth lands) that lie underneath the Newmarket Viaduct, which carries the Southern Motorway over the
Auckland suburb of Newmarket through to inner city Auckland.
1 The leasing powers were amended to provide (for example) for extended lease terms by the
Dilworth Trustees Act 1902.
2 There is the Senior Campus in Epsom (still situated on the original site of the Dilworth homestead), the Junior Campus established in 1993 in Remuera, and the Rural Campus in Mangatawhiri called Te Haeranga for Year 9 boys.
[4] Following the recent replacement of the original Viaduct, Dilworth says that these lands are (largely) no longer required for the public works purpose for which they were taken. It says that the Crown is obliged to offer them back under s 40 of the Public Works Act 1981 (the PWA81). It seeks a declaration to that effect.
LEGAL CONTEXT
The Public Works Act 1981
[5] The Dilworth lands were originally taken by the Crown under the Public Works Act 1928. The relevant provisions of that Act will be referred to in the course of the factual overview which follows later in this judgment. For present purposes, however, it is principally the PWA81 that is relevant.
Definitions
[6] Section 2 of the PWA81 defines:
(a) “land” as “includ[ing] any estate or interest in land”; and
(b) a “public work” as:
(a) every Government work or local work that the Crown or any local authority is authorised to construct, undertake, establish, manage, operate, or maintain, and every use of land for any Government work or local work which the Crown or any local authority is authorised to construct, undertake, establish, manage, operate, or maintain by or under this or any other Act; and include anything required directly or indirectly for any such Government work or local work or use:
(b) every Government work or local work constructed, undertaken, established, managed, operated, or maintained by any Education Authority ... and every use of land for any Government work or local work which such education authority constructs, undertakes, establishes, manages, operates, or maintains, and include anything required directly or indirectly for any such Government work or local work or use:
(c) any Government work or local work that is, or is required, for any university within the meaning of the Education Act 1989.
The taking provisions
[7] Although not directly in issue here, the provisions which authorise the taking of land are included in this overview as important context for the offer back obligation. The relevant sections are contained in Part 2 of the Act.
[8] Section 23 stipulates that notice is to be given where land is “required to be taken for any public work”. That notice (which must be Gazetted and served on the owners of, and others with a registered interest in, the land) must:
(a) identify the land concerned;
(b) describe the purpose for which the land is to be used;
(c) set out the reasons why the taking of the land is considered reasonably necessary; and
(d) specify the period within which objections may be made.
[9] The objection process is dealt with under s 24. Objections are determined by the Environment Court, whose report and findings are binding on the agency wishing to acquire the land.3 In considering an objection the Environment Court is required to:4
(a) ascertain the objectives of the Minister or local authority, as the case may require:
(b) enquire into the adequacy of the consideration given to alternative sites, routes, or other methods of achieving those objectives:
(c) in its discretion, send the matter back to the Minister or local authority for further consideration in the light of any directions given by the court:
3 Section 24(10).
4 Section 24(7).
(d) decide whether, in its opinion, it would be fair, sound, and reasonably necessary for achieving the objectives of the Minister or local authority, as the case may require, for the land of the objector to be taken:
(e) prepare a written report on the objection and on the court’s findings:
(f) submit its report and findings to the Minister or local authority, as the case may require.
[10] A sub-part of Part 2 containing ss 28 to 31 is headed “Extending estates in land that may be acquired or taken”. Sections 28 provides that the power to acquire or take land for a public work shall include the power—
(a) to acquire or take and to hold the land subject to any particular estate, interest, easement, profit à prendre, covenant, or encumbrance, whether for the time being subsisting or not:
(b) to acquire or take and to hold separately—
(i) any particular estate or interest in the land, whether for the time being subsisting separately or not; or
(ii) any easement or profit à prendre over the land, whether for the time being subsisting or not.
[11] And s 31(1) makes it clear that the surface, subsoil, or air space of the land may be acquired separately:5
The Minister or local authority may, in acquiring or taking land for a public work, acquire only the surface, together with such part of the subsoil or of the air space above the surface as is deemed necessary, or may acquire or take all or only such part of the subsoil or of the air space above the surface as is deemed necessary excluding the surface.
The offer back requirement
[12] A brief historical account is necessary before turning to consider the offer back requirement under the PWA81.
[13] The first statutory provision relating to the sale of surplus public works lands was s 29 of the Public Works Act 1876. This provided that land taken under that Act that was no longer required could be sold by first offering it to the person then entitled to the land from which it had originally been severed. If not accepted, then it could be sold to the owner of adjacent lands. This provision was, in substance, carried over into the Public Works Acts of 1886, 1892, 1905, 1908 and 1928 (the PWA28).
[14] But in 1935, the mandatory offer back provision in the PWA28 (s 35) was replaced with a permissive one. An agency holding surplus land could choose to sell
it (either privately to the owner of any adjacent lands, or by public auction or tender by the agency) or it could choose to retain the land. For the next 47 years, holding agencies therefore had an absolute discretion as to the disposal of compulsorily acquired land that was no longer required for public work purposes. Many local authorities and Government departments chose retention. This practice became known as “land banking”.
[15] But now there is s 40. That section presently provides:6
Disposal to former owner of land not required for public work
(1) Where any land held under this or any other Act or in any other manner for any public work–
(a) is no longer required for that public work; and
(b) is not required for any other public work; and
(c) is not required for any exchange under section 105–
the chief executive of the department [ ... ] or local authority, as the case may be, shall endeavour to sell the land in accordance with subsection (2), if that subsection is applicable to that land.
(2) Except as provided in subsection (4), the chief executive of the department [ ... ] or local authority, unless-
(a) he or it considers that it would be impracticable, unreasonable, or unfair to do so; or
(b) there has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held
shall offer to sell the land by private contract to the person from whom it was acquired or to the successor of that person-
(c) at the current market value of the land as determined by a valuation carried out by a registered valuer; or
(d) if the chief executive of the department [ ... ] or local authority considers it reasonable to do so, at any lesser price."
[16] The purpose of s 40 clear. As Smellie J said in Rowan v Attorney-General:7
On the face of it the plain meaning and intent of the section appears to be remedial, bringing to an end a perceived injustice where land could be compulsorily taken by the Crown for one purpose, and arbitrarily used for another without giving the original owner the opportunity to buy it back.
FACTUAL CONTEXT
[17] The first Newmarket Viaduct was built in the 1960s by the National Roads Board (the NRB).8 The Viaduct is essentially a curved bridge that traverses the central-southern portion of the Newmarket metropolitan centre. It was one of the first post-tensioned balanced cantilever bridges in New Zealand. It carries part of State Highway 1 (SH1), which is the primary route for north-south traffic movements through the Auckland Isthmus.9
The Dilworth lands
[18] The Dilworth lands that are the subject of these proceedings were referred to for convenience by the parties as “the first lands”, the second lands” and “the third lands”.
[19] The first lands comprise:
7 Rowan v Attorney-General [1997] 2 NZLR 559 (HC) at 568. See also Bennett v Waitakere City HC Auckland CIV-2005-404-7348, 14 May 2007 where Hugh Williams J specifically noted that the Parliamentary debates on the 1981 Bill supported section 40’s anti-land-banking purpose.
8 The NRB’s responsibility for the Viaduct was taken over upon the establishment of Transit New
Zealand (Transit) on 1 October 1989. In turn, Transit was replaced by the New Zealand Transport Agency (NZTA) on 31 July 2008. All three entities have been involved in the events with which this judgment is concerned. But it is NZTA which is presently charged (inter alia) with building, maintaining and managing New Zealand’s roads, including the Viaduct.
9 Within Auckland, SH1 is comprised of the Northern Motorway, the Central Motorway J unction and the Southern Motorway. The Viaduct carries the Southern Motorway.
(a) 3,104m2 being Part Lots 1, 2 and 3 on Deeds Plan 976, and being part of Allotments 2, 9 and 10 of Section 11 of the Suburbs of Auckland, further being all the land formerly comprised and described in cancelled Certificate of Title Vol 513/299 (Land Registration District of Auckland); and
(b)3,924m2 being Lots 14, 15, 16 and 17 on Deeds Plan 976, being part of Allotments 2 and 9 of Section 11 of the Suburbs of Auckland, further being all the land formerly comprised and described in cancelled Certificate of Title Vol 513/300 (Land Registration District of Auckland).
[20] The second lands comprise the registered proprietor of 2,024m2 being Part Lots 12 and 13 on Deeds Plan 976, and being part of Allotments 2, 9 and 10 of Section 11 of the Suburbs of Auckland, further being all the land formerly comprised and described in cancelled Certificate of Title Vol 513/96 (Land Registration District of Auckland).
[21] The third lands comprise:
(a) 1,695m2 situated in Block VIII Rangitoto Survey District, City of Auckland, North Auckland Registration District, and being Lot 25, Deeds Plan 976, and further being all the land formerly comprised and described in cancelled Certificate of Title Vol 513/38, North Auckland Land Registry; and
(b)3,595m2 being Lots 22, 23 and 24 on Deeds Plan 976, and being part of Allotment 2 of Section 11 of the Suburbs of Auckland, further being all the land formerly comprised and described in cancelled Certificate of Title 1894/8 (North Auckland Land Registry).
[22] The exact location of the lands can be seen on the map below:
[23] In accordance with Dilworth’s standard investment practice, the Dilworth lands were, prior to their acquisition by the Crown, the subject of long term bare ground leases. Thus:
(a) As to the first lands:
(i)Part Lots 1 and 2 Deeds Plan 976 (part CT 513/299) was subject to a leasehold estate pursuant to registered lease 22262 granted to CH Frankham Limited;
(ii)Part Lot 3 Deeds Plan 976 (part CT 513/299) was subject to a leasehold estate pursuant to registered lease 22251 granted initially to Ray Vincent Limited (later known as NZ Transport Supplies Limited);
(iii)Lots 14 and 15 Deeds Plan 976 (CT 513/300) was subject to a leasehold estate pursuant to registered lease 22260 granted initially to CH Frankham Limited; and
(iv)Lot 16 Deeds Plan 976 (CT 513/300) was subject to a leasehold estate pursuant to registered lease 22261, both granted initially to CH Frankham Limited.
(b)As to the second lands, Lots 12 and 13 on Deeds Plan 976, was subject to a leasehold estate pursuant to registered lease 23941 granted initially to McAlpine Refrigeration Limited, which McAlpine Refrigeration Limited had transferred to CH Drysdale Limited on or about 9 March
1966 (retaining the right to compensation in respect of aspects of the construction of the Newmarket Viaduct)
(c) As to the third lands:
(i)Lot 25 Deeds Plan 976 (CT 513/38) was subject to a registered “renewable” lease for 21 years from 28 December 1947. The lease was initially granted to Florence Mairea Macdonald, but transferred on 12 August 1952 to the Auckland Electric Power Board; and
(ii)Lots 22, 23 and 24 Deeds Plan 976 (CT 1894/8) was subject to a leasehold estate pursuant to registered lease 27690 granted initially to CH Frankham Limited.
A chronology of the acquisition process
[24] A Middle Line Proclamation for the original Newmarket Viaduct was gazetted on 6 December 1960 (the Proclamation).10 Once gazetted, the Proclamation was:11
conclusive evidence that the land therein referred to ... [is] vested in Her Majesty in fee-simple, freed and discharged from all mortgages, charges, claims, estates and interests of what kind soever ...
[25] The Proclamation was registered against the historic titles to the Dilworth lands on 12 January 1961.12
[26] Notwithstanding the automatic vesting in the Crown of title to the lands covered by the Proclamation, it seems that the Crown subsequently entered into agreements under s 32 of the PWA28 to acquire the leasehold and freehold interests
from the lessees and Dilworth. This process is set out chronologically below.
10 The Plan appended to the Proclamation does not clearly indicate the width of land taken on either side of the middle line. However, s 216(2) of the Public Works Act 1928 (the PWA28) relevantly provided that the maximum distance either side of the middle line could not extend beyond 10 chains.
11 PWA28, s 216(1)(e) (which applied to proposed roads as well as railways by virtue of s 30 of the
PWA28).
12 Under No. 17992. From the date of gazetting, the Minister of Works was empowered to give notice to owners and registered lessees of affected lands as to the Minister’s virtually unfettered powers of entry under s 216(1)(c) of the PWA28. Strictly speaking, therefore, those parts of the Dilworth Lands covered by the Proclamation (including any leasehold interests) were compulsorily taken by operation of law upon the publication of the Proclamation in the Gazette.
Acquisition of leasehold interest in Lot 25
[27] By Proclamation gazetted on 26 July 1962 the Auckland Electric Power Board’s leasehold interest in Lot 25 Deeds Plan 976 (CT 513/38) was taken by the Crown for “better utilisation”. AEPB was paid £8,000 in compensation.
Acquisition of leasehold interests in Lots 1, 2 and 3
[28] On 21 September 1963, the leasehold interest in Part Lot 3 Deeds Plan 976 (part CT 513/299) held by NZ Transport Supplies Limited was taken for “better utilisation purposes”. NZ Transport Supplies Limited were paid £16,250 in compensation.13
[29] On 21 November 1963, the leasehold interests in Part Lots 1 and 2 Deeds Plan
976 (part CT 513/299) held by CH Frankham Limited was taken for better utilisation purposes. CH Frankham Limited was paid £15,000 compensation.
Acquisition of freehold interest in Lot 25
[30] On 1 September 1965, the District Commissioner of Works wrote to Dilworth advising that the Crown intended to take the areas covered by the footings of the 19th pier and a defined part of the airspace over Lot 25, and offering compensation for the resulting depreciation in the value of the land.
[31] The Dilworth Trust Board Minutes of 18 October 1965 record that the Board had received a report from its valuer, Mr Gardner, whose opinion was that:
… having regard to the severe detrimental affection to the site caused by the Viaduct, it would be to the Board’s advantage to sell the freehold interest in the property (zoned as Industrial B) to the Crown.
13 There LINZ record of the acquisition history notes that NZ Transport Supplies Ltd had, upon being notified that its building would need to be demolished and repositioned, tried to sell its leasehold interest privately but, due to the proposed development of the motorway, it had been unable to do so, despite the strong demand for industrial and commercial properties in the area.
[32] The Minutes go on to record that the Board resolved:
… that the Department be advised that the Board had given full consideration to the effect of the Viaduct on the section and in the view of the material damage caused it was of the opinion, that the Department should purchase the Board’s freehold interest at [a named figure], plus the usual expenses.
[33] Dilworth subsequently wrote to the District Commissioner recording its decision to offer the freehold to the Crown “in view of the severe detrimental affection to the site caused by the motorway Viaduct.”
[34] At this point, it seems useful to interpolate that the relevance of “injurious affection” from a valuation perspective was two-fold. First, the land that remained after the taking of the pier footprints and airspace, and the construction of the Viaduct over the land would have been less commercially viable, for obvious reasons. Secondly, at this time, there was a significant restriction on the compensation payable to a former owner for injurious affection, namely:14
that noise, lights, and other incidental traffic disturbance could only be taken into account to the extent that they emanate from the land taken.
[35] That meant that in practical terms, Dilworth’s right to compensation if only the pier footprints and airspace were taken would have been limited to disturbance emanating from the footprints and airspace, rather than from the Viaduct structure as a whole.15 The valuer’s advice to sell Lot 25 in its entirety to the Crown therefore needs to be understood in that context.
[36] Returning now to the acquisition narrative, the District Commissioner of Works requested an assessment of the extent of the injurious affection to Lot 25. He received advice that Dilworth's request for a whole property purchase was reasonable
in the circumstances, with the advice recording that the property:
14 Squire Speedy “Land Compensation” (1985, New Zealand Institute of Valuers) at 36, referring to the rule in Seller v Minister of Works [1934] NZLR 988; Edwards v Minister of Transport [1964]
2 QB 134.
15 This limitation was abolished by s 64 PWA81, which provides for compensation for injurious affection to be assessed by reference to the whole of the public work on the owner's balance land and not just that part of it located on the land taken.
… was a good industrial building site but its future use will undoubtedly be seriously limited by the presence of three Viaduct piers partially or wholly on the section plus a limited clearance under the Viaduct ...
[37] The Crown's acquisition of Lot 25 was ultimately accomplished by way of application to the (then) Supreme Court under s 92 PWA28, due to limitations in James Dilworth’s Will on the Board's ability to sell land. The resulting consent order dated 4
March 1966 recorded that the compensation to be paid by the Crown for the freehold title to Lot 25 was “in respect of the compulsory acquisition of the claimant's land”. The land was formally taken by Gazette Notice as from 21 November 1966, for “better utilisation” purposes.
Acquisition of freehold interests in Part Lots 1–3, Lots 12–16 and 22–24
[38] In February 1967 (after the original Viaduct was completed), there are Dilworth Trust Board Minutes that show that the Ministry of Works had contacted Dilworth proposing to take the freehold title to pier footprints and the airspace along the Viaduct in relation to Lots 14 to 16 (the eastern side of the First Lands) and Lots
22 to 24 (the northern part of the Third Lands). The Minutes go on to record that due to the loss of significant airspace, the Board’s valuer, Mr Gardner, had recommended that the Ministry be asked to acquire the whole of Lots 14, 15 and 24, and to pay compensation in relation to Lots 16 and 23 (which were less adversely affected).
[39] By 11 December 1967, Dilworth had been advised that the Ministry had refused this request, and that the Ministry was “reviewing desired clearances of any future buildings from Viaduct piers and also clearances required between any new buildings and the superstructure of the Viaduct.” The Board resolved to ask the Ministry to reconsider.
[40] Two years later (on 8 December 1969), the Trust Board’s Minutes record that the tide was turning in Wellington as a result of the serious problems that had developed with the original Viaduct:
The Department is awaiting word from the National Roads Board concerning clearances etc. (This has been ongoing since November 1967). It would now seem that in view of the failures found in the Viaduct that it will be necessary to keep the area under the Viaduct free of all buildings or at the most, single storey structures. At this stage it looks as if the Department will purchase outright Lots 14, 15 and 24 and pay compensation for Lots 16 and 23. This is what the Board decided on upon Mr Gardner’s recommendation made in January 1967. (This was turned down by the Department).
[41] Board Minutes dated 15 February 1971 indicate that negotiation for the Crown acquisition was proceeding, with the Board having obtained the relevant valuations. In addition, the Board noted that it was understood from the Ministry of Works that they also intended to acquire Lots 12 and 13 (the two properties leased from Dilworth by CH Frankham & Co Ltd in Mahuru Street).
[42] The Board resolved to obtain the Ministry’s confirmation that it would be taking over Lots 12 and 13, and if so, to obtain a valuation. The minutes of April 1971 deal with the valuation of both the freehold and leasehold estates. Mr Gardner’s advice had been that compensation for the freehold title should be $24,379 and compensation for loss of the leasehold estate $4,896 (a total of $29,275).
[43] The Minutes dealing with the acquisition of the balance of the First Lands (Part Lots 1-3) have not been able to be located. In the event they were included in the lands acquired by the Crown pursuant to a memorandum of agreement reached in December
1971 (discussed further below).
Change in Crown Policy and the Memorandum of Agreement with Dilworth
[44] The problems that developed early on in the life of the Viaduct appear to have led to a change in thinking about the desirability of acquiring and retaining the land underneath it. There was evidence suggesting that this change of thinking may also have been of wider application. In particular, on 9 March 1970 there was a submission made by the Director of Roading to the NRB which expressed his view that:
The Board’s interests would be protected better if the land beneath viaducts which is not used for roads, railway track or waterways was purchased outright. The Board would then have full control of all activities and could determine the most appropriate use for individual areas taking into consideration safety of the structure, access for inspection or maintenance, and appearance. The Board could consider leasing some areas to previous occupiers, new lessees or local authorities.
Unless a viaduct is designed with the intention that the space below is to be used as a building it should be a general rule that the land underneath and immediately adjacent is kept open and free of all but the smallest buildings. The open land could be developed for public reserve with bushes, gardens and lawns; carparking; open car sales; storage and sale of non-flammable goods; or other use which may be appropriate depending on the character of the locality.
[45] The submission recommended that the NRB retain freehold ownership of land under viaducts “wherever possible” and that specific Board approval should be sought for any exception. That recommendation was subsequently adopted as policy by the NRB.16
[46] In any event, consistent with this new policy, in August 1971 the NRB approved in principle the acquisition of the remaining private land beneath the Viaduct subject, inter alia, to the Ministry of Works submitting a report on the possible future use of the land. As well as the new retention policy, this proposal was considered to be warranted due to developing concerns about fire risks. A memorandum of agreement effecting the proposal was entered into between Dilworth and the Crown on 6 December 1971. Effectively, Dilworth agreed to the Crown compulsorily acquiring (by Proclamation) the freehold and leasehold estates in Part Lots 1, 2, 3, 12 and 13, and Lots 14, 15, 16, 22, 23 and 24 in return for compensation of $354,900.
[47] On 28 April 1972, a Proclamation was made taking the leaseholds in Lots 14,
15, 16, 22, 23 and 24 for the purposes of “better utilisation”.17
16 As counsel for Dilworth pointed out, however, at this time the PWA28 did not oblige the Crown to offer back land taken for public works to former owners. There was, accordingly, no legal impediment or objection to the development of such a general rule about the retention of compulsorily acquired land.
17 The leaseholds were owned by CH Frankham Limited, who received compensation of $260,500.
[48] By Gazette Notice 106696 dated 19 May 1972:
(a) Part Lots 1, 2, 3, DP 976 (former cancelled CT 513/299 (North
Auckland Land Registry);
(b) Lots 14, 15, 16, DP 976 (part of former cancelled CT 513/300 (North
Auckland Land Registry); and
(c) Lots 22, 23, 24, DP 976 (former cancelled CT 1894/8 (North Auckland
Land Registry);
were taken by the Crown under the provisions of s 32 of the PWA28, from and after 5
June 1972, for the Auckland - Hamilton Motorway.18
[49] In October 1972, the NRB approved in principle the District Commissioner of Works’ proposals to lease the land under the Viaduct on the basis that utilisation of it would be limited to parking and restrictive open storage.
[50] By Gazette Notice No 084864.1 dated 26 February 1975, a triangular piece of land was taken by the Crown from Lots 12 and 13, DP 976 (part of former cancelled CT 513/96 (Land Registration District of Auckland)) under s 32 of the Public Works Act 1928, from and after 6 March 1975, for the purposes of the Auckland-Hamilton Motorway.19
[51] By Gazette Notice No B963454.1 dated 15 February 1989, Lots 22 to 25 were declared to be set apart for the purposes of a motorway.
18 Part Lots 1-3 were on the corner of Broadway and Mahuru Street. Lots 14-16 were to the east of Part Lots 1-3, also fronting onto Mahuru Street. Lots 22-24 were on the other side of Mahuru Street, between it and railway land, immediately to the north of Lot 25 (which had been acquired in 1966).
19 Lots 12 and 13 are the “Second Lands”. The leasehold interests in Lots 12 and 13 had been acquired by the Crown from CH Drysdale Limited in March 1966.
The offer backs
[52] The PWA81 came into force on 1 February 1982. As noted earlier, this was the first time in over 50 years that the Crown had been placed under an obligation to offer back land that had been compulsorily acquired but become surplus to public works requirements.
1983 offer back
[53] In 1983, the Crown identified lands surplus to its requirements for the Viaduct, shown as the green (the first offer back) and pale blue (the second offer back) on the map above. Dilworth minutes of 18 April 1983 record that the Board had received a letter from the Ministry of Works and Development advising the land was surplus, and that the Board would act on its valuer’s recommendation to express an interest in reacquiring it.
[54] Dilworth reacquired both areas of land offered back. It later on-sold the first offer back land to St Lukes Group. It retains title to the second offer back land.
1989 offer back
[55] In 1989, the Crown offered to sell back to Dilworth Lot 1 on DP 130974 – part of the Third Lands, shown on the map above (the third offer back land) and Part Lot
25 and Lots 22 – 24. The s 40 report dated 16 January 1989 records that:
The land described below is held by the National Roads Board to protect the Newmarket Viaduct and has until recently been used as a motorway depot. It is now surplus to requirements and we have been asked to dispose of it.
[56] Following this recommendation, the NRB obtained a valuation of the land, and on 19 May 1989 offered it back to Dilworth for $1.85 million plus GST. Dilworth subsequently refused the offer on the basis that the price was “grossly excessive”, particularly given the limitations of the site. After numerous re-valuations and unsuccessful attempts to sell the land at private auction, it was eventually sold in late
1992 for $550,000, less than a third of the price at which it had been offered to
Dilworth.
Acquisition of lands for the replacement project
[57] In design terms, the original Viaduct had been regarded as cutting edge, with an anticipated design life of 100 years. But as already noted, there were difficulties with it almost from the outset. It had inadequate capacity to resist heavy live loads, differential temperature effects and seismic loading. Some defects were remedied early on, but in the following decades it became clear that, as a major component of Auckland’s highway network, the Viaduct was not sufficiently robust and would need to be significantly upgraded or replaced.
[58] In 2005, Transit lodged a Notice of Requirement (NOR) for a designation of a new Viaduct structure to replace the original bridge.20 The NOR and its accompanying report recorded Transit’s preference to build a new Viaduct that would have “the ability to achieve a residual design life of at least 100 years”. Options involving refurbishment of the existing Viaduct were thought likely to endure for only around half that period of time.
[59] The proposal was that the replacement Viaduct would occupy a different land footprint from the original, with a centre line 13 metres to the north of the centre line of the original structure. Transit’s report stated that Transit would need to designate further land for the new alignment and for construction purposes.
[60] The resulting designation (Designation A07-01B) was subject to certain agreed conditions. These included that:
(a) within 12 months following completion of construction of the Project, the Requiring Authority shall give notice to Auckland City Council in accordance with Section 182 of the RMA for removal of those parts of the designation which are not required for the long term operation,
maintenance and mitigation of effects of the State Highway;
20 Under Part 8 of the Resource Management Act 1991 a designation is a provision in a District Plan giving effect to the requirement so notified. In general terms, its effect is to limit the use of the land that is subject to the designation.
(b)the Project Management Plan was to include an Urban Design Plan (UDP), which was to be prepared by a suitably qualified person (including an artist where appropriate), and was to:
(i)include a Concept Plan/Report depicting the overall urban design concept and providing a framework for the design intent, layout and urban design measures;
(ii) address Transit’s “Central Motorway Improvements: Urban
Design Framework” (dated 6 September 2001); and
(iii) address Transit’s “Urban Design Implementation Principles”.21
[61] Transit then set about acquiring the properties that it had identified as needed for the construction of the new Viaduct. In three specific cases, however, it agreed not to acquire compulsorily the freehold title to the land. Rather, it acquired (where necessary) the title to the pier footprints and relevant airspace and entered into leases for the balance of the lands during the construction of the new Viaduct and obtained any necessary access or service easements. The three cases in which Transit invoked this mechanism are shown on the map below and will be referred to as “Westfield”
(two areas), “Robertson” and “5 Mahuru Street”.
21 Transit/NZTA is a signatory to the Urban Design Protocol, a non-statutory protocol, which seeks to ensure that the design of buildings, places, spaces and networks that make up towns and cities work now and in the future. Its Urban Design Policy was approved in 2007 and guides the NZTA in implementing high standards of urban design as part of its project deliverables.
[62] It is necessary to say a little more about the circumstances and detail of each of the arrangements.
Westfield
[63] Transit’s designation for the new Viaduct was subject to a number of appeals to the Environment Court, including one brought by Westfield NZ, which was in the process of applying for consents to construct a large retail development (with a capital value of $700 million) on one of the sites. It had been suggested that for every year Transit delayed the Westfield development Transit might be liable for up to $49 million in compensation.
[64] Westfield’s Environment Court appeal was settled by agreement dated
4 May 2007. The agreement covered both land around Clovernook Road (which was the site of the proposed retail development) and other Westfield land on Mahuru Street. In summary, the agreement provided that Westfield would withdraw its appeal on the basis (inter alia) that:
(a) Transit gave Westfield its approval to construct, operate and maintain its development (a shopping centre) on the land bounded by Gillies Avenue, Clovernook Road, Mortimer Pass and Broadway;22
(b)Westfield agreed to enter into an encumbrance instrument in relation to part of that land. In general terms the encumbrance (which is detailed in the sixth schedule to the agreement and discussed further below) would provide for “the protection of the ongoing operation of the Viaduct (a no-complaints covenant), the protection of a certain area from inappropriate development, and confirmation that certain fire protections standards will be met”;
(c) Westfield was given the right under s 34 of the PWA81 to require
Transit to acquire a portion of the properties at 10 and
14 Mahuru Street.23 Westfield subsequently exercised that right in
September 2014;
22 This is the land marked “Westfield (Clovernook)” on the map above.
23 Transit had signalled that it might need to acquire a portion of 10 Mahuru Street and to have access to the remainder of 10 and 14 Mahuru Street during Viaduct construction. The 10 Mahuru Street property is the land marked “Westfield (Mahuru)” on the map above.
(d)the parties agreed to negotiate entry agreements for construction access in relation to other specified parcels of land; and
(e) Transit agreed not to commence any compulsory acquisition process in respect of any of the balance of the Westfield lands.
[65] The recitals to the agreement state that the agreement would “ensure any development within close proximity of the Viaduct is subject to appropriate covenants protecting the structural integrity of the Viaduct as well as its on-going Operation”. Recital E specifically referred to the condition in the NOR requiring that Transit give notice to the Auckland City Council, within 12 months of the Viaduct’s completion, of any intention to remove those parts of the Designation which are not required for the long term operation, maintenance and mitigation of effects of State Highway 1. The Recital noted that:
Transit has accepted that development may be appropriate within close proximity to, and even under, the Viaduct subject to suitable clearance distances.
[66] The encumbrance set out a detailed scheme of exclusion areas and access corridors and other controls, including:
(a) an Airspace Exclusion Area in which no structure or other thing may extend. This area is defined as the area horizontally six metres from the outside edge of the Viaduct and vertically three metres below the lowest part of the soffit of the Viaduct;
(b)a Ground Level Exclusion Area in which Westfield may not build or erect any structure that cannot be removed within 24 hours. That area is defined as those areas within: three metres from the outside edge of a column; within one metre from the outside edge of any foundation; and between any columns located opposite each other;
(c) specifications as to what load any roof, floor or accessway constructed within six metres of the outside edge of the Viaduct must be able to take;
(d)a requirement that Westfield is to allow NZTA access at all reasonable times and on reasonable notice to the roof of any building or accessway constructed within six metres of the outside edge of the Viaduct for the purposes of inspection, maintenance or repair of the Viaduct. It must also allow unfettered access to any column; and
(e) a requirement that Westfield is to ensure that all buildings constructed within six metres of the outside edge of the Viaduct are designed and constructed to comply with particular fire protection standards.
Robertson
[67] On 28 May 2007, soon after the execution of the Westfield agreement, Transit entered into an arrangement with Messrs Andrew Robertson and Evan Cummins, the registered proprietors of land situated at the corner of Broadway and Clovernook Road.24 This involved an agreement for advance compensation under the PWA81, which provided for:
(a) the owners to:
(i)sell to the Crown the airspace over parts of the land 12.3 metres above ground level and the pier footprints required for the Viaduct; and
(ii)grant the Crown an easement over 63 square metres to “enable the Crown to access and maintain the pier columns following practical completion of the replacement Viaduct”; and
(iii)execute an encumbrance (as encumbrancer) with the Crown (as encumbrancee) to meet the Crown’s need to protect the motorway and the Viaduct from damage, have ground level access to the pier columns for the Viaduct for inspection and
maintenance purposes, and protect the continued operation of
24 Shown as “Robertson” on the Map above.
the motorway and the Viaduct from “reverse sensitivity issues”;25 and
(b) the Crown to:
(i)lease the owners’ land for the duration of construction of the Viaduct on the basis that for that period “it will be necessary for Transit New Zealand to occupy all of the owner’s land for demolition of the improvement, and construction of the Viaduct”;26 and
(ii)enter into a sublease with the owners’ former lessee to enable it sufficient time to wind down its business.
5 Mahuru Street
[68] The Crown also sought access to the land at 5 Mahuru Street, which was the land that had been offered back to Dilworth in 1989 and subsequently sold to a third party. That land had since been unit titled. On 22 October 2007, the Crown gave notice of its intention to take the land for the purposes of the Newmarket Viaduct Project.
[69] In November 2007, the unit title holders lodged notices of objection in the Environment Court. Objection was made on the basis that although the land was “temporarily required for construction” of the replacement Viaduct it was “not required for long term operational and maintenance purposes”.
[70] Negotiations followed between the unit holders and the Crown. The objections were settled on the basis of an agreement dated 14 July 2008, which provided that:
25 Reverse sensitivity is a New Zealand planning term describing the effects of newer uses on prior activities occurring in mixed-use areas. The form of the encumbrance to be entered into was substantially the same as that in the Westfield Agreement and included the same Airspace Exclusion Area, Ground Level Exclusion Area, building design specifications in relation to the roof, floors and accessways, access to the roof of any building or accessway, and design specifications in relation to fire protection.
26 But it was also recorded that “it is the intention of the Owner at the conclusion of the Project to reoccupy the balance of the Owner ’s land and ... to construct buildings on the balance of the Owner's Land to replace the existing improvements being removed or demolished”.
(a) the owners would sell to the Crown the airspace rights over 1,038 m2 of the land (being the airspace three metres below the soffit of the completed Viaduct) and the pier footprints (a total of 160 m2);
(b)the parties would enter into an encumbrance to meet the Crown's needs to:
(i) protect the motorway and the Viaduct from damage;
(ii)protect the continued operation of the motorway and the Viaduct from reverse sensitivity issues;27 and
(c) the Crown would lease the remainder of the owners’ land for the period of construction of the project on the terms recorded in the agreement.
NZTA’s post-construction intentions for the Viaduct lands and its interactions with Dilworth
[71] Transit transmogrified into NZTA in 2008. Construction of the new Viaduct began in early 2009.
[72] NZTA began considering the future of the lands under and adjacent to the Viaduct before it was complete. A report/presentation prepared in July 2010 shows that NZTA was thinking about how the lands might best be used or developed, including whether it could undertake development of the land itself. Amongst the potential uses under consideration was “Mixed-use developments (eg commercial / retail / light industrial)”.
[73] By this time, the newly appointed Head of Property for the Dilworth Trust
Board, Mr Ian Redshaw was investigating the possible development of land still owned by Dilworth at 470 and 480 Broadway. The buildings on that land had become
27 The form of the encumbrance was to be substantially similar to that in that in the Westfield and Robertson agreements and included the same Airspace Exclusion Area, Ground Level Exclusion Area, building design specifications in relation to the roof, floors and accessways, access to the roof of any building or accessway, and design specifications in relation to fire protection.
obsolete and all the leases were coming to an end in February 2015 with no rights of renewal.
[74] Mr Redshaw’s evidence was that the shape of the sites at 470 and
480 Broadway made them difficult to develop in an economic way and that their development potential was likely to be considerably enhanced if Dilworth could resume ownership of 450 Broadway. At (and before) that time, 450 Broadway had been leased to other parties including for the purposes of a reasonably substantial car yard.
[75] On 24 September 2010, Mr Redshaw emailed NZTA, confirming an earlier conversation in which he had advised that Dilworth was interested in acquiring its former lands under the Viaduct. He noted that the leases of the nearby lands that Dilworth still held were all due to expire, and that for planning purposes Dilworth wished to have “some degree of certainty … around selling this land back to Dilworth Trust Board (at a fair market value), which would enable us to incorporate the land into our proposed neighbouring development”.
[76] NZTA’s property management consultant Mr Ritchie Scofield replied to
Mr Redshaw’s email, stating that:
The NZTA embarked on an exercise in June 2010 to examine its requirement for the operation and maintenance of the Newmarket Viaduct but will not be in a position to determine whether any land will be surplus until this investigation is complete and the conclusions and recommendations have been reviewed and approved by the NZTA Board.
[77] Mr Redshaw and a colleague met with Mr Scofield and NZTA’s Urban Designer, Ms Bell, at NZTA on 27 May 2011. They made a presentation to NZTA involving architectural drawings of Dilworth’s proposed development of the lands. Mr Redshaw’s file note of the meeting recorded that NZTA’s advice was that no decision had been made on the intended use of the lands, but confirmed that although NZTA could not itself develop the land it could lease it for up to 35 years. Mr Redshaw also noted NZTA’s advice about constraints on the use and development of the land, including safety and access requirements, height limits for buildings under freeway structures and restrictions to protect against earthquake and fire, as well as
demands resulting from the future need to refurbish and replace the new Viaduct. The file note goes on to say:
Their ideal design is a carpark in the central area (multilevel is OK) with buildings to the street edges. I presented our design which was generally in accordance with this also. They will need to have permanent access rights over the property built under the Viaduct. They indicated they would keep us posted as they develop their plan and keep us informed.
[78] On 9 June 2011, Mr Redshaw emailed Mr Scofield confirming that Dilworth was happy to work with NZTA to achieve the safety and urban design goals that NZTA had outlined. Mr Scofield responded that NZTA was in the process of undertaking further studies “so that we can fully understand the requirements for the safety and security of the Viaduct”, and said he expected to have a draft report on the issues by the end of the following week. He undertook to keep Dilworth informed as the study developed:
[79] On 14 June 2011 NZTA forwarded to Mr Redshaw a document prepared by Boffa Miskell, NZTA’s urban designers. It was dated 11 May 2011 and entitled “Newmarket Viaduct Lands – Development Scenarios and 3D Modelling”. It showed very significant high density development of the land under the Viaduct, including substantial buildings. Mr Redshaw’s view was that any developer undertaking construction on this scale would require at least a 50 year lease in order for it to be economical. His evidence was that, from his perspective, such a development proposal was tantamount to a decision that the land was no longer required for the purposes of the Viaduct.
[80] It is necessary to interpolate here that it seems tolerably clear (from both the documentary record and from the oral evidence at the hearing) that care was taken to avoid NZTA being seen to be considering the possibility of a s 40 offer back. For example, in the context of an email exchange on 3 December 2010, it was made clear that potential development of the land should be considered prior to any discussion
about disposal. More particularly, Mr Scofield, wrote:28
28 Between 2004 and November 2011, Mr Scofield was contracted by Transit and then NZTA to manage the disposal of surplus Crown land in Auckland, Northland and, until 2009, the Bay of Plenty and Waikato.
The land disposal scenario is not something that you should ever discuss with anyone because of the legal implication and no plan that you produce should ever make any reference to land disposal. Please ensure that I am invited to any meeting where land tenure / disposal might be discussed with a third partly because anything that is said could be used by a former owner to force the Crown to offer the land back at a price which is considerably less than market value.
[81] Similarly, when Mr Scofield was asked during cross-examination why consideration was given to whether certain parcels would be exempt from offer back under s 40(2) if no decision that the land was surplus had been made, he said:
… in reality we weren’t, and after discussing this with the Property Group we weren’t prepared to actually investigate people’s section 40 rights because that would involve … an investigation which would be discoverable.
[82] Also in June 2011, NZTA received expert planning advice from Blakey Scott Planning Limited on (inter alia) its urban design/development obligations arising from the conditions attached to Designation A07-01B. The advice was that:
Overall, it is our conclusion that Condition 1.2 of designation A07-01B requires NZTA to review the designated land subject to A07-01B and to remove the designation from those parts which are not required for the “long term operation, maintenance and mitigation of effects on the State Highway.”
There are a number of policies that NZTA have developed to meet their non-statutory requirements under the Urban Design Protocol to which they are a signatory. The Newmarket Viaduct Framework was developed to meet the conditions of Designation A07-01B and it is our opinion that this framework satisfies the intent of the designation conditions. None of the policies reviewed as part of this assessment appear to require any specific actions by NZTA in relation to the future use of land beneath the Newmarket Viaduct.
(emphasis added)
The Opus Land Protection Review
[83] On NZTA’s instructions, in August 2011 Opus International Consultants (Opus) prepared a report entitled “Newmarket Viaduct Land Protection Review Report – Stage 1” (the Opus Report). The stated purpose of the Report was to provide:
… an assessment of the historical, current and future operational and maintenance requirements of the Newmarket Viaduct, and … the requirements and effect of any future construction improvements to the structure and the surrounding land.
[84] Opus considered the likely effects of both major refurbishment of the Viaduct after 50 years and its replacement after 100 years. As to the former, it noted that the Viaduct would “inevitably” undergo major renovation works in approximately
50 years time.29 It stated:
Depending on the extent of these renovations and whether it involved the replacement of deck spans it is possible that a foot print of land equivalent to the designation extent will be required for the works. In reality however the refurbishment works could most likely be accommodated within the footprint of land directly below the viaduct with a safe working protection zone allowed for either side of the structure.
(emphasis added)
[85] Opus recommended that there should be further discussions with the Auckland Motorway Alliance, Newmarket Viaduct Northern Gateway Alliance design team and NZTA in order to confirm the extent of the land corridor required for such an operation.
[86] As to replacement, Opus noted that the Viaduct had a design working life of
100 years, but noted that, given that traffic growth in Auckland was (in 2011) continuing at three per cent per year, it was arguable that it might need replacement before then. Opus noted that the new Viaduct had had to be realigned northward by approximately 13 metres in order to enable the on-going operation of the motorway during deconstruction and construction, and said that any future replacement might assume its original position, or potentially occupy the original alignment and new alignment to accommodate additional traffic lanes. It concluded:
Based on the above we consider it prudent to retain the existing designation extent to accommodate the replacement of the structure in years to come.
[87] At section 3.3 of the Report, under the heading “Desirable Land Footprint Area”, Opus noted that in replacing the original Viaduct “all of the land designated was used for construction and deconstruction activities” and that temporary supports, structure and plant had also been required to be placed in the road and rail reserve.
The report went on to note that:
29 The report noted that the NZTA bridge manual defines major renovation as “maintenance work necessary to maintain the strength, ductility capacity, or serviceability of a bridge to enable it to fulfil its functional requirement, which exceeds 20% of the replacement value of the bridge”.
While the concept of storing materials offsite could be further investigated, it is unlikely to be feasible given; the suitability of nearby storage facilities, the nature of materials stored, and the logistics of transporting the materials from a storage compound to the site compound.
[88] Soon after the completion of the Opus Report, decisions about whether the relevant land should be retained were made by two internal NZTA groups: the State Highway Management Team for the Auckland Region (SHMT) and the Highways and Network Operations Value and Assurance Committee (VAC), a national level committee.
SHMT decision
[89] On 7 October 2011, a paper was presented to the SHMT by NZTA’s urban designer Ms Jacque Bell, and Mr Scofield. Their paper noted that the conditions of the 2005 designation required NZTA to consider urban design for the land under the Viaduct and that an Auckland City Council Plan Change now meant that activities that had previously been deemed an acceptable use, such as car parking, would no longer be so. The paper noted that doing nothing was not an option for the land under the Viaduct.
[90] In terms of any potential offer back of the land, the paper referred to s 40(1)(b) but, again, expressed caution about taking any action that might be perceived as suggesting that s 40 might be engaged:
15 The designation has no particular relevance as to whether land is surplus. However, if the designation is removed from some land then this is likely to be viewed as evidence that the land is not required for the long term operation, maintenance and replacement of the Viaduct.
…
17 Most of the land was acquired 50 years ago. As a result it is possible that there may be no obligation under s 40 of the PWA to some of the former owners. However, we cannot take this investigation further, because it would be necessary to advertise for successor which would suggest the land is already surplus.
[91] Then, it when on:
18 If the former owner or their successor still exist, it is possible that the land would be exempt from the Offerback obligation because there has been a significant change in character as a result of the public work.
19 There have been several recent High Court decisions decisions which indicate that the land holding agency can retain the land for possible future use. In this instance, ownership of the land by the Crown will still be required for the Viaduct to ensure its operation can continue unimpeded by alternative uses.
[92] The Bell/Scofield paper went on to explain that a “do maximum” urban design proposal articulated in the Newmarket Master Plan (the Master Plan) had been developed, but was unlikely to be able to be implemented unless ownership or long- term leases of the land could be offered. A draft of the Master Plan was annexed to the paper.30 The land uses proposed, provided for “a mix of land uses including commercial and office space, active retail frontages, car park buildings and multi-functional open space”. In short, it anticipated intensive commercial development of the lands underneath the Viaduct, including the construction of substantial, multi-storey buildings on those lands.
[93] Concern that any offer back might impede any cohesive urban design plan and lead to unco-ordinated development of the area appears throughout the documentary record. For example, an undated NZTA document headed “Newmarket Viaduct Land
Use Masterplan” states:
30 Development of the Master Plan had begun in September 2010.
Given the high number of individual land parcels covered by the designation
… and the sterilization of part of the land to cater for the continued operation and maintenance of the viaduct, development of the designated land by the
original owners is likely to result in a fragmented urban form with the residual
developable areas often insufficient to support a good quality and economically viable building. The District Plan’s on-site parking requirements exacerbate this situation, especially on the smaller parcels where the lettable floorspace is not sufficient to pay for ‘built’ car parking. Those parcels not viable for built development are likely to be used for car parking and other low value uses which will detract from the vibrancy and amenity of adjoining parts of Newmarket.
To avoid this outcome, it is suggested that NZTA facilitates the comprehensive development of the designated land. This would require NZTA to retain its ownership of land within the designation and to work with adjoining private and corporate land owners to a common vision.
(emphasis added)
[94] The concern found expression in the Bell/Scofield paper as follows:
20 The sale of land on the western side of Broadway to the former owners’ [sic] is unlikely to result in the sort of comprehensive development that the NZTA envisages because of the large number of owners and the shape and size of each of the parcels.
[95] Ms Bell nonetheless confirmed in her evidence, however, that urban design considerations were not relevant to whether or not NZTA required the land. That evidence was, of course, consistent with the advice received from Blakey Scott a few months before the SHMT meeting.
[96] In terms of the prospect of leasing the land under the Viaduct, the paper presented to the SHMT noted:
21Leasing of land required for a work but not specifically required for physical occupation by those works on a day by day basis is specifically contemplated in the Government Roading Powers Act (GRPA). However, all leases of land with the legal status of road are subject to a statutory right to terminate on at six months notice without compensation.
[97] Later, it elaborated:
39Investigation of the existing ground rentals in Newmarket shows that a lease period of 60 years would be required to generate adequate revenue to justify the costs of constructing even a low rise building with the required attributes which will provide a profit for the developer.
40 A Quantity Surveyor has undertaken a cost assessment of the
Masterplan Development scenario which shows that a lease period of
99 years would be required to make this type of development attractive to investors. This has been confirmed from consultation with developers. However, some developers have indicated that they would require ownership of the land before they were prepared to consider investing in the multi story development in this area.
41Given the nature of the land, the tenure and the constraints on development, it is clear that these land areas will only attract development to a low to modest standard unless we are able to provide long term leases (99 years), if an economic return on investment is going to occur. In other words, the development of substantial commercial buildings is not a likely outcome unless the developers can be provided with greater security over the land, either through a long term lease or by owning the land.
[98] The paper noted that the Viaduct was a “pinch point” in the southern motorway corridor and that it was therefore “essential that adequate land is retained to ensure that the strategic network can respond to future demands”. It said that there was also a “genuine need and necessity” for the long-term retention and ownership of the land within the designation under the Viaduct to ensure:
• Safety and security of the Viaduct from all hazards;
• Safe operation of the road;
• Access for the operation, maintenance and ultimate replacement of the
Viaduct and related structures;
• Physical structures such as the piers;
• Management of noise, vibration, and debris falling off the Viaduct;
• Accommodation of public utilities allowed as of right on a road;
•Anything else that is required indirectly to ensure continued operation.
[99] The paper then went on to say that:
The strategic importance of the Viaduct, the need to use the whole of this land for the deconstruction and replacement of the Viaduct and the fact that the land under the existing Viaduct has been retained in Crown ownership since the original Viaduct was constructed 45 years ago helps to justify the retention of all the land under the Viaduct.
[100] The paper identified that NZTA’s specific needs in relation to the land were:
(a) to retain the maintenance and exclusion envelope under and around the
Viaduct;31
(b)to maintain an exclusion area on the land around the Viaduct piers and around the services;
(c) to establish the location of access points from Clovernook Road, Edgeley Avenue and Broadway;
(d)to retain the current designation footprint under the Viaduct to allow for the repair and ultimate replacement of the Viaduct.
[101] It concluded that NZTA had “demonstrated that it has an ongoing operational
need and can fully justify a future need for the land …”.
[102] The SHMT accepted the strategy recommended in the paper, subject to “socialisation” with the VAC because (inter alia) the urban design proposal was a “departure from the Transport Agency’s previous approach to the use of the land under a Viaduct, which was to hold that land in an undeveloped state.”
The VAC decision
[103] A shorter version of the Bell/Scofield paper considered by the SHMT was subsequently provided to the VAC. The paper identified the ongoing need for access and clearance areas for the purposes of monitoring and inspection, maintenance and repair, storm-water operational requirements, emergency access, utilities and service easements, and renovation. The paper stated that retention of the whole of the designated land area would be required for replacement purposes, repeating the points made in the Opus Report that have been noted above. The existence of the statutory offer back obligations in the event that retention could not be reasonably justified were
noted.
31 Exclusion envelope: Depending on the extent of this work a footprint equivalent to the existing ground level designation may be required for this work. This has been taken into account in the identified clearance zones and encumbrance that would be placed on the titles.
[104] On 3 November 2011, the VAC agreed that retention of the land was the right option and that any development beneath the Viaduct needed to balance optimising the return from such development with appropriate access for the planned and unplanned structural maintenance and improvement.
Consultation on the Master Plan
[105] Dilworth and other interested parties were invited to a “stakeholder meeting” at NZTA, which took place on 7 November 2011. Mr Redshaw and Dilworth’s architect attended. The draft Master Plan and a “Comprehensive Development Scenario” was presented by NZTA at the meeting and feedback sought from all participants. The presentation indicated that NZTA was contemplating land usage involving the construction of major buildings over (inter alia) 450 Broadway. The plans tabled at the meeting also included a skate park over the western part of the Dilworth lands.
[106] On 8 November 2011, Mr Redshaw wrote to NZTA expressing some specific concerns about the proposals presented at the meeting, including in particular the placement of the skateboard park and a new sand filter. Mr Scofield responded the same day confirming that nothing was written in stone and that no decision could be made about land use until further consultation had occurred.
[107] It appears that in May 2012 there were further discussions between NZTA and Dilworth during which Mr Scofield advised that NZTA was considering leasing the land on a long-term basis. NZTA also advised that survey work it had ordered on the land around the Viaduct was near completion. The resulting Survey Office Plans (SOPs) provided a detailed scheme of land controls that would be practically imposed on the lands by their incorporation in an encumbrance instrument and easements.32
NZTA’s evidence at trial was that this survey work was commissioned so that NZTA
could have a clear understanding of the legal nature of the land as it was developed in accordance with the Master Plan and the restrictions on the use of the land.
32 These were SOP 460478, approved as to survey in May 2013 (with regard to the Third Lands);
and SOP 460481, approved as to survey in April 2015 (with regard to the First and Second) lands.
[108] A draft encumbrance instrument was forwarded to Mr Redshaw by Mr Scofield in early September 2012. It recorded NZTA as encumbrancee and created a scheme of access-ways, exclusion areas and conditions and restrictions on building to preserve NZTA’s ability to access the Viaduct. The controls mirror those in the encumbrances agreed as part of the Westfield, Robertson and 5 Mahuru Street settlements.
The revised Master Plan
[109] Following the November 2011 consultation meeting, revisions to the Master Plan were undertaken. The skate park proposal was, for example, abandoned. The resulting amended version envisaged the construction of significant multi-storey retail, office and parking buildings underneath the Viaduct structure, including over 450
Broadway and the other Dilworth lands. It also made provision for a bus layover on the corner of Mahuru Street and St Marks Road (part of the third lands).
[110] In late November 2012, NZTA published a newsletter seeking feedback on the revised draft Master Plan. The Newsletter stated:
The Opportunity
To ensure the land is attractive to developers, NZTA is looking at offering long term leases of approximately 99 years to ensure that any development meets the urban design objectives of the District Plan. The successful development of the land will centre on the ability of the smaller fragmented land holdings to be consolidated into larger parcels which are capable of accommodating buildings of a meaningful size and quality. The larger the building area the more adaptable the land holdings will be to accommodate a range of future uses.
[111] The Newsletter also noted that “major renovation of the Viaduct was anticipated in approximately 50 years’ time, and recorded that “this has been taken into account in the identified clearance zones and encumbrance that would be placed on the titles.” An advertisement in materially identical terms was placed by NZTA in the Central Leader on 5 December 2012.
The 2013 draft lease
[112] On 5 February 2013, Mr Redshaw followed up with Mr Scofield about Dilworth’s interest in the site at the corner of Mahuru Street and Broadway, reiterating Dilworth’s desire to develop the entire site. He asked for further information on the type and terms of the leases mentioned in the Newsletter. On 15 March 2013, Mr Scofield responded, saying:
The Crowns [sic] Solicitors are currently preparing the lease documents. I hope to have all of these completed within 6 weeks. The leases will be subject to restrictions on the bulk and location and use which are designed to ensure the safety and security of the viaduct and meet the urban design objectives. Any future use of land beneath the Viaduct will need to give effect to the urban design outcomes that are being sought by the District Plan and the NZTA Master Plan that gives effect to the District Plan and Designation conditions. The successful lessee will be required to enter into a registered lease with the Crown for a period of 99 years - the NZTA will administer that lease.
[113] Mr Redshaw subsequently sent a number of follow-up emails, making it clear that the delays in resolving the issue were causing Dilworth financial loss. A draft lease was provided to Dilworth on 13 June 2013.
[114] The draft lease relevantly provided:
(a) an initial 20 year term, with three rights of renewal and one further right of renewal for 20 years less one day (a 99 year term); and
(b)a right to terminate early after 60 years from the commencement date with graduated compensation payable (recognising that, as the full term of the lease came closer to its natural conclusion, so too would the life of its improvements); and
(c) that NZTA’s approval of any construction was required in order to ensure that the safety and security of the Viaduct was not compromised by any development; and
(d)that NZTA would be entitled to access the Viaduct for maintenance purposes, and in an emergency at any time; and
(e) in the event of a Force Majeure, either party would be able to terminate the lease.
Developments leading to these proceedings
[115] Soon after receipt of the draft lease, Mr Redshaw became aware of the arrangements entered into by NZTA in relation to 5 Mahuru Street. On 13 January
2014, Mr Redshaw wrote to NZTA referring to these and requesting that a similar memorandum of encumbrance be prepared for the Dilworth lands and provided to Dilworth for consideration in conjunction with the draft lease. He inquired whether offer back of the Dilworth land together with such a memorandum of encumbrance and any necessary right of way easements could be considered as an alternative to the lease proposal.
[116] On 29 January 2014, Mr Redshaw spoke to Mr Scofield, who offered to forward to him encumbrance instruments for the properties at 450 Broadway,
6 Mahuru Street and 10 Mahuru Street (the Dilworth lands). The evidence was that Mr Scofield advised Mr Redshaw that he did not consider that an offer back was required because NZTA might require the Dilworth lands for future works. He also said that the Council required part of 10 Mahuru Street for a different public work. Mr Redshaw told Mr Scofield that Dilworth wished to register its interest in
450 Broadway, 10 Mahuru Street and 5 Mahuru Street, and that once the Council had defined the area required for Public Use at 10 Mahuru Street, Dilworth wished to discuss dealing with the block in its entirety with NZTA.
[117] It was at about this point that Mr Redshaw first instructed Dilworth’s solicitors to take formal steps in relation to Dilworth’s offer back rights under s 40 of the PWA81. The present proceedings were issued in May 2015.
Post commencement developments
[118] Ms Bell’s evidence was that development of the land in line with the Master Plan was “largely placed on hold” once the proceedings were filed. That was confirmed in cross-examination by Mr Andrew Muller, NZTA’s Property Portfolio
Manager, although he went on to say that some further work had been done more recently to prepare land on the other side of Broadway for leasing.
[119] On about 17 October 2016, Mr Redshaw’s brief of evidence was served on the defendants. His brief made it clear that Dilworth intended to put the 2013 draft lease into evidence. On 19 October 2016, Mr Redshaw met with Mr Muller and Mr Keith Morris, at Mr Muller’s instigation. He was advised at the meeting that NZTA had held off leasing the Dilworth lands, “out of respect for Dilworth”, but had now decided to continue with the development proposed in the Masterplan.33 He was advised that NZTA now proposed to make the lands under the Viaduct available for development under 49.9 year ground leases which would be on more attractive terms from a lessee’s perspective than the previously proposed lease.
[120] Mr Redshaw’s file note of the meeting also records:
When asked why they would provide the freehold interest to 5 Mahuru Street, and to the other owner on the other side of Broadway, Keith said it was before his time and that it was a sub-optimal solution to enable NZTA to get on with the development of the viaduct at that time. Keith said NZTA did it to primarily to [sic] avoid delays and the costs associated with going to court. He said the viaduct has been designed for a 100-year life but it is likely to have an obsolescence life of 50 years, hence the 49.9 year ground lease.
NZTA indicated they would like to treat with us first prior going to the market given our Section 40 claim. I noted that we may be interested in a 49.9--year lease, but it would depend on the terms of the lease. I also mentioned that any discussion for such 49.9 year ground lease would be clearly on a “without prejudice” basis so it didn’t affect our High Court claim.
[121] A copy of the draft lease was produced in evidence at trial by Mr Muller. Key provisions include:
(a) the term of the lease has been reduced to 50 years less one day; and
(b) the lease is terminable by the lessor at any time on 12 months’ notice;
and
33 It seems the Masterplan was further updated in late 2016.
(c) in the event of early termination, there is no right to claim compensation except in accordance with s 62 of the PWA81 as if the lease had been taken for a public work; and
(d)rent is to be pre-paid for the entire term in a single payment on the commencement date.
[122] Notwithstanding NZTA’s evidence that the intention was to make the new lease attractive to potential lessees, it is difficult not to agree with Ms Aldred that this lease is significantly less favourable; it provides almost no security of tenure. It appears to represent a material change in approach by NZTA.
[123] Mr Muller’s evidence-in-chief was that the changes came about “as a result” of advice received from CBRE (an international commercial real estate services and investment firm) about the “terms of the proposed lease” and resulted in changes to “better preserve the Transport Agency’s ability to access the land”. However,
Mr Muller accepted under cross-examination that NZTA had decided to change the terms of the leases before it sought advice from CBRE. Indeed, it is quite apparent from the CBRE report (and an earlier report from marketing consultants) that NZTA’s instructions were that the lease should be for a 50 year term. There was, however, no evidence of any documents recording the change in NZTA’s approach or the reasons for it.
The evidence about what land access is needed to inspect and maintain the
Viaduct?
[124] Dilworth called an Australian bridge engineer, David Coe, as an expert witness. The Crown called Martin Leak, a traffic and transport engineering specialist. Their evidence focused on whether ownership of the lands under the Viaduct was necessary from an engineering perspective in order to protect, maintain and possibly replace it.
[125] In the end, there were not significant areas of difference between them. The areas of agreement were summarised by Mr Coe as follows:
(a) the land requirements under the bridge for operations and maintenance will be limited to providing access to erect scaffolding for inspecting the piers F, G, H and J no more than once every 6 years, and replacing the bearings on piers H and J after approximately 50 years;
(b)the way to conduct a thorough review of pier integrity is by close inspection and by touch (close-up visual and tactile checking). This standard should at least be applied to the six yearly detailed (Principal) inspection;
(c) drones could be used for the two yearly general inspections;
(d)there are maintenance techniques that obviate the need for much of the ground access planned for by NZTA to both the piers and the underside of the deck structure;
(e) a “snooper truck” can be used for the purposes of inspection beneath the viaduct superstructure (the box girders and the bridge deck) as suggested in the Opus Report;
(f) safety and stability become an issue if scissor or boom lifts are to be
considered;
(g) there is “a limitation on the usefulness of scaffolding for full, close up
inspections;” and
(h) the need for a replacement structure may be different from the current
Viaduct based on the pace of disruptive technological change.
[126] Mr Coe’s view was that the Viaduct could be safely accessed, maintained and inspected and additional expected works carried out from within the exclusion zones provided for in the SOPs. Although there were some small areas of disagreement from NZTA witnesses about how some of the work might be carried out, ultimately these differences had no bearing on the shared conclusions that the exclusion zones provided for and contemplated in NZTA’s Master Plan provided all necessary access.
[127] As already noted, Mr Coe’s view that there was no certainty that the Viaduct would require replacement at the end of its 100-year design life appeared to be accepted by NZTA witnesses. More specifically, Mr Coe’s evidence was that the
100 year design life is expected to be achieved without maintenance. While Mr Leak suggested that the Viaduct might not last the full 100 years, the bridge designers were prepared to warrant it on that basis and Transit/NZTA made unequivocal public statements that the viaduct will endure for that long. All that can really be concluded is that, while inevitably uncertain, there are reasonably based expectations as to it reaching or surpassing its intended longevity.
[128] Also relevant is the evidence given about the Master Plan by Mr Thomas Newson, NZTA’s project manager for the Newmarket Viaduct Replacement Project over the period July 2007-2011. He explained that the Plan had been designed to allow for both the construction of the fourth northbound lane and the addition of post- tensioning tendons at a later time.
[129] In terms of the fourth lane, Mr Newson said that the Master Plan “was designed to maintain access to the underside of the bridge deck and piers for delivery of this work to be completed”. He confirmed in cross-examination that the lane widening work could be done even if there was development on the land in accordance with the Master Plan. He also confirmed that the equipment needed to carry out this work did not need to be stored under the Viaduct.
[130] Mr Newson also said that he was comfortable that the Master Plan would permit the addition of post-tensioning tendons to strengthen the Viaduct. Mr Leak (an expert engineering witness called by the Crown) said that “in all likelihood the [strengthening] work could be carried out from within the clearance zones provided
for under the Master Plan”. Mr Scofield said that based on advice NZTA was satisfied that any repair work required in 50 years’ time could be carried out from within the clearance zones provided for in the Master Plan and under the encumbrances to be placed on the titles.
DISCUSSION
[131] As the words of s 40 make clear, there is a series of sequential questions that must be answered in order to determine whether offer back under s 40 is required:34
(a) is the land being held for a public work?
(b) if so, is the land no longer required for that public work?
(c) if so, is the land required either for any other public work or for any exchange under section 105 of the PWA81?35
[132] If the third question is reached and the answer to it is “no”, then the land must be offered back unless:
(a) it would it be impracticable, unreasonable, or unfair to offer the land back to the original owner (or successor in title); or
(b)there has been a significant change in the character of the land as a result of the relevant public work.36
[133] The following discussion is structured by reference to those questions.
34 See for example Attorney-General v Morrison [2002] 3 NZLR 373.
35 The answer to which must be ascertained by the land-holding agency in a reasonably expeditious manner.
36 A reasonable time must then be permitted to prepare the land for sale and locate the original owner or the successor in title.
Is the Dilworth land being held for a public work?
[134] In the present case, there is no dispute that the Dilworth lands have been held under the public works legislation for a public work, namely for the purposes of the Auckland - Hamilton motorway and, more specifically, the Newmarket Viaduct. There is no additional requirement that the land in issue was taken under compulsion. As the Court of Appeal said in Williams v Auckland Council:37
The only element of compulsion that might need to be established is that which is axiomatic wherever a local authority’s acquisition of land followed its statutory notice of a requirement for or an intention to take land for a public work. As Tipping J observed in Bowler Investments Limited v Attorney General, the prospect of a public work communicated formally in a gazette notice itself has the effect of compelling the owner to sell to the local authority by making sale on the open market ‘difficult if not impossible’.
Is the land no longer required for that public work purpose?
[135] There can be little doubt that this is the central issue in this case.
[136] I begin by noting that the onus of proof under s 40(1)(a) is on Dilworth to establish that the land is no longer required for the public work for which it was taken.38
[137] Next, I record that the parties agree that the “no longer required” threshold is not met if all that the evidence shows is that the holding authority has a preference to retain the land. The phrase connotes a higher bar of need or necessity. 39 That is consistent with the remedial purpose of the section.
[138] Equally, however, it seems clear that land can be “required” in terms of the meaning of the term in s 40, although it is not currently being “used” for the relevant public works purpose.40 Nonetheless a “degree of commitment” is necessary to meet
the “required” threshold.41
37 Williams v Auckland Council [2015] NZCA 479 at [42].
38 Edmonds v Attorney-General HC Wellington CIV-2000-485-695, 3 May 2005 at [67].
39 Kerr-Taylor v Attorney-General [2004] 3 NZLR 104 (HC).
40 Sisters of Mercy v Attorney-General & Ors HC Auckland, CP 219/99, 6 June 2001 at [68].
41 Edmonds, above n 38, at [70].
[139] It was (I think) also agreed that s 40(1)(a) involves an objective, rather than subjective, analysis of whether the land is no longer required.42 That means that the land-holding authority need not have made a conscious decision that the land is surplus.43 As the Court of Appeal said in Attorney-General v Hull:44
[41] The first, and usually determinative criterion in s 40 is satisfied when in terms of subs (1)(a) the land is no longer required for the purpose for which it was taken. Whether that is so is a question of fact involving an assessment of intention in light of objective circumstances. Proof that the land is no longer required for the relevant public work may be achieved by demonstrating an affirmative decision to that effect. The point can also be established by examining the conduct of the body holding the land and, if appropriate, drawing an inference that the body has concluded that it no longer requires the land for that work. Alternatively, the evidence may establish that that was not the case and, for instance that the landholding agency remained in a state of genuine indecision. But if any reasonable person would undoubtedly have concluded that in all the circumstances the land was no longer required for the relevant public work, the agency may well have difficulty asserting that it had not so concluded, and therefore had not come under any obligation to proceed in terms of the section.
(emphasis added)
[140] Conversely, in Attorney-General v Horton, the Privy Council rejected the Crown’s contention that a decision by the land-holding agency that the land was no longer required for the public work (coal mining) purpose was the end of the matter.45
After referring to another case (concerning a railway) the Judicial Committee said:46
[T]he question of whether land is required for the purposes of an existing railway constructed under statutory powers lends itself to objective assessment in accordance with expert evidence. It is a question on which the opinion of the directors may well be wrong.
NZTA’s view about whether the land is still “required” may, accordingly, not be determinative and can be displaced by the Court’s own objective assessment of the
relevant facts.
42 Attorney-General v Horton [1999] 2 NZLR 257 at 262.
43 Attorney-General v Morrison [2002] 3 NZLR 373 (CA) at [17]; Counties Manukau Health Limited v Dilworth Trust Board [1999] 3 NZLR 537 (CA) at [25].
44 Attorney-General v Hull [2000] 3 NZLR 63 (CA).
45 Attorney-General v Horton [1999] 2 NZLR 257 (PC)
46 At 262.
[141] That said, however, the position here is slightly more nuanced than in other cases. Dilworth does not dispute that the portions of the Dilworth lands upon which the piers rest are required for Viaduct purposes, as is the airspace immediately below the Viaduct. Nor does it contend that NZTA will not require access to and through the surrounding land from time to time, in order to inspect, maintain, repair and (in the long term) possibly replace the Viaduct. What it says is that there can be an offer back that enables those requirements to be accommodated while returning to Dilworth the still usable, and valuable, remainder.
[142] To my knowledge, the Court of Appeal’s decision in Attorney-General v Edmonds is the only case in which the New Zealand Courts have considered the possibility that the Crown might be obliged to offer back an estate or other interest in land that is less than, or different from, that which was compulsorily acquired. There, the original landowners, who had succeeded in the High Court, contended in the alternative, and by way of cross-appeal, that there was an obligation to offer back the airspace above the relevant land.
[143] The Court began by noting that the Crown’s contention in response was that if there was an obligation to offer back airspace, the legislation would have made express provision for that. It had submitted that absent such a provision, there was no jurisdiction to bring such a claim or to order such relief and that the Act supported that submission. After referring to the definition of “land” and ss 28 and 31 of the PWA81 (set out at [10] and [11] above) the Court went on to say:
[157] Even if the point had been raised earlier, we do not consider this to be a case where an obligation to offer airspace arises.47 The practicalities of requiring consideration in every case as to whether there is a need to offer airspace back even if the underlying land is still needed, puts too high a burden on the Crown. We consider that, if intended, any such burden would have been expressly provided for in the legislation. We do not discount the possibility that in some cases there might be an obligation to offer back airspace even in cases where the underlying land is needed for a public work. We consider, however, that this would be rare and may be confined to situations where there are concrete plans for the use of the airspace for a non-public work. Although the prospect of use of airspace was considered at various points in this case, in our view this does not carry much weight as it was historical in nature.
47 The Court agreed with Miller J in the High Court that the airspace issue had been raised too late.
(emphasis added)
[144] I am not, of course, concerned here with a potential offer back of airspace. On the contrary, and as I have said, Dilworth accepts that the Crown requires the airspace immediately below the Viaduct, as well as the pier sites for the purposes of the public work. But I can see no reason why the dicta just emphasised could not apply equally here. If ss 28 and 31 of the PWA81 contemplate the taking and holding of land subject to a particular interest or encumbrance (whether subsisting or not) then why should not an offer back also be made subject to such an interest or encumbrance? Similarly, if airspace can be taken separately from the land to which it relates, why could that land not be offered back, subject to the retention of airspace? While (as the Court of Appeal acknowledged) such cases might be rare, if there are (in the Court’s words) concrete plans for the long-term use of the core land for a non-public work, those questions at least require consideration.
[145] I consider that the following points are pertinent in the present case.
[146] First, it is clear that the construction of the original Viaduct did not require Crown ownership of the freehold to all the land under the Viaduct. In very large part the Crown had acquired only the leasehold interests in the land by the time the Viaduct was completed.
[147] Secondly, the construction of the new Viaduct did not require Crown ownership of the freehold to all the land underneath it. The Westfield, Robertson and
5 Mahuru Street arrangements are clear evidence of that.
[148] Thirdly, to the extent there is a “policy” of retaining land under bridges and Viaducts, that cannot be determinative of the s 40(1)(a) inquiry. The obligations under s 40 must necessarily yield to any policy that is inconsistent with it. But in any event, there was no evidence that such a policy still exists. Indeed, the Westfield, Mahuru and Robertson arrangements suggest the opposite. Moreover:
(a) the comprehensive development envisaged by NZTA and its consultants in relation to the Dilworth Lands cuts directly across the rationale for the policy, namely that retention would allow “the land underneath and immediately adjacent [to be] kept open and free of all but the smallest buildings”; and
(b)the 1970 submission from the Director of Roading48 indicates that the policy was intended to apply “unless a Viaduct is designed with the intention that the space below is to be used as a building”. The replacement Viaduct has been designed with the intention that the space below it is to be used for buildings as the comprehensive development envisaged by NZTA in its Master Plan demonstrates and as NZTA acknowledged in a settlement agreement with Westfield.
[149] Fourthly, the proposition that the Dilworth lands (minus the pier sites and some airspace) are no longer required for the purposes of the Viaduct is underscored not only by the arrangements entered into with the owners of adjacent land, but also by NZTA’s readiness to enter into long term leases of the lands and to permit extensive commercial development on them. Both Mr Redshaw and Mr Muller acknowledged that a 99 year lease was analogous to a freehold title. That is plainly correct.
[150] It is difficult to know what to make of the shorter, post-commencement draft lease. In light of the expert evidence (and indeed the evidence of a number of the relevant NZTA witnesses), it is difficult to see why the shorter term is now regarded as necessary; there can be little doubt that its terms will be unattractive to potential lessees and is likely to make development of the sort envisioned by the Master Plan difficult. It seems to me that, to the extent that NZTA wishes to rely on the new lease to support its position, the absence of any evidence explaining the change counts
against it.
48 See [44] above.
[151] Fifthly, as far as future maintenance and replacement is concerned, there are the points made at [148] and [149] above. Moreover I am inclined to agree with
Ms Aldred that to construe s 40 so as to permit retention for 100 years in anticipation of future reconstruction sails perilously close to land banking. But the most important reality is that:
(a) the Crown retains the power to reacquire the land under the PWA81 (as it proposed to do in relation to 5 Mahuru Street) if that proves to be necessary;
(b)encumbrance instruments of the kind provided for under the Robertson, Westfield and 5 Mahuru Street settlements would protect the maintenance envelope and would give NZTA full ability to access for inspection any necessary maintenance works, and the addition of the fourth northbound lane that has been provided for by the designers;49
(c) NZTA also has extensive statutory powers to access any and all land for such purposes. By way of elaboration:
(i)The Government Roading Powers Act 1989 is a statutory regime enabling the construction, maintenance and replacement of motorways. In particular, s 74 of that Act provides that [NZTA] may temporarily occupy or use any land for the purpose of constructing, reconstructing, or repairing a motorway, and
may do the following things on the land:
49 In addition, s 176 of the Resource Management Act further restricts what an owner of land that is subject to a designation can do on the land without the written consent of the requiring authority. In this case, the Designation would require NZTA ’s written consent to the development of the site by constructing buildings or infrastructure.
• deposit any construction materials;
• deposit, permanently or temporarily, any material suitable for use in landscaping or restoration of that land or of the motorway;
• form and use drains and hard standings;
• manufacture or fabricate materials and construct incidental works; and
• erect workshops, sheds, and other buildings of a temporary nature, and store or use any plant or equipment.
(ii)under s 61 of the same Act, NZTA has an unfettered power to do “all things necessary to construct and maintain in good repair [the Viaduct]” including entry onto any land for access, as well as to exercise certain powers of the local authority in relation to roads;50
[152] Lastly, issues periodically raised by NZTA in the documentary record about the need to comply with the conditions of Designation A07-01B and, in particular, the Urban Design requirements, appear on the evidence to be a red herring.51
[153] I accept entirely that NZTA has a preference to continue to own the freeholds to the Dilworth lands. But the question is whether ownership is necessary, given the matters noted above. In particular, is there a material difference in terms of the ability meet its public works purpose between entry into long term leases of the kind proposed and the return of the freehold subject to retention of the airspace and pier footprints
and the protection of an encumbrance?
50 The powers under the Government Roading Powers Act are subject to a notice regime (10 days), except in the event of an accident or emergency, in which case immediate access is authorised.
51 See in particular [82] above.
[154] Mr Scofield’s position in that respect was that the “sale of land that needs to be subject to tight use restrictions and extensive access requirements is, in my experience, a sub-optimal position for the Transport Agency because the Transport Agency may be forced to rely on court proceedings to enforce compliance”. Again, however, I am inclined to agree with Ms Aldred that:
(a) in the considerable documentary record before the Court there was no evidence of a decision made by NZTA to retain the Dilworth lands for that reason;
(b)NZTA did not appear to be unduly concerned about these limitations in entering the arrangements with the proprietors of the Robertson, Westfield and 5 Mahuru Street lands;
(c) the encumbrance instrument would be enforceable by the encumbrancee (NZTA) under s 313 of the Property Law Act 2007 regardless of whether the encumbrancer was a lessee as opposed to an owner. By way of example, the Robertson encumbrance instrument provides that the encumbrancer (Robertson) must ensure that any construction on the affected land complies with the terms of the encumbrance. NZTA has full rights of enforcement against the encumbrancer (owner of the land) and is entitled to solicitor-client costs and a complete indemnity in respect of any enforcement action;52 and
(d) NZTA has the benefit of the additional statutory powers already noted.
[155] For all the above reasons, I have formed the view that s 40(1)(a) is triggered here. It is important to emphasise, however, that the circumstances of this case are highly unusual. In particular, my conclusion cannot be taken as suggesting that a land holding agency is under some kind of obligation to undertake an ongoing review as to the existence of potential, less intrusive, alternatives to retaining the freehold interest
in land taken for public works purposes. The need to consider those alternatives arises
52 The only additional control NZTA would have as owner and lessor rather than as encumbrancee would be the ability to forfeit the lease for breach of covenant(s).
here only because of a unique blend of historical and present day factors, all of which point in the same direction.
Section 40(1)(b) - is the land required for another public work?
[156] In its second amended statement of defence the Crown has pleaded at that if the Dilworth Lands are no longer required under s 40(1)(a) they “may be required for another public work in terms of s 40(1)(b)”. Dilworth then sought further particulars, in relation to each relevant parcel of land, of the nature of the other public work or works for which it was alleged that the parcel might be required. The Crown responded that:
… the first and second defendants have pleaded that the Dilworth Land is required for the public work for which it is held. Therefore no consideration has been given at this stage to whether all or any of the Dilworth Land is required for another public work. If the Court holds that all or part of the Dilworth Land is not required for the public work for which it is held, then the chief executive is under a statutory duty to ascertain whether it may be required for another public work or other public works or for an exchange under s 105 or whether to offer to an adjoining owner, but this cannot be known until the nature and extent of the surplus land is determined.
[157] Dilworth contends that this response misapprehends the scheme of s 40 and is inconsistent with the relevant authorities. It says that in the absence of any already identified, alternative, public work, the time has passed to invoke s 40(1)(b). Dilworth relies on the decision in Attorney-General v Morrison, where the Court of Appeal noted that once land acquired for a public work is no longer required for the purposes of the work:53
... [it cannot] be the case, however, that an agency or the Chief Executive can delay indefinitely, ostensibly ascertaining whether paras (b) and (c) are satisfied, on the basis, for instance, that some other agency may possibly require the land. That would defeat the purpose of s 40.
[158] Ms Aldred also relied upon the High Court’s decision in Edmonds v Attorney- General, where Miller J observed:54
It would seem to follow from Hull and Morrison that when the landholding agency invokes s 40(1)(b) or s 40(2)(a) in litigation, the first question for the Court is whether it considered the relevant subsection at the time it decided
53 Attorney-General v Morrison [2002] 3 NZLR 373 (CA) at [20].
54 Edmonds v Attorney-General HC Wellington CIV-2000-485-695, 3 May 2005 at [148].
the land was no longer required for the designated work, and reached a decision within a reasonable time. If the agency did not invoke the relevant subsection to justify a decision to return the land at the time, it is difficult to see why the Court ought to reach a decision on its behalf, in litigation brought after any reasonable time needed to reach a decision has long passed.
[159] But I do not think these authorities go as far as Ms Aldred would wish. Although the upshot of my finding above is that the freeholds of the Dilworth lands are no longer required for the purposes of the public work for which they were acquired, that conclusion is different from the conclusion reached by the Crown and/or NZTA. Miller J’s first question (“whether [the landholding agency] considered the relevant subsection at the time it decided the land was no longer required”) has therefore not yet arisen.
[160] By contrast, in Edmonds the Crown had accepted that (from 1989 onwards) it had not required the land in question, but contended that the land had instead been required by the Council in terms of s 40(1)(b), despite no action having been taken. It was in that context that the Court found that the Crown’s failure to act timeously was fatal. Here, on the basis that NZTA’s view about ongoing need was arrived at in good faith (and there has been no pleading or other suggestion that it was not), it cannot fairly be said that the respondents should previously have considered s 40(1)(b).
[161] That said, however, it may be that NZTA’s continued and periodic need to access the lands for Viaduct purposes, and the restrictions that will inevitably be placed on any development on the lands, means that an alternative public works use is unlikely. But I am not prepared to hold that the time has already passed for consideration of that issue. Rather, that consideration should now promptly take place.
Section 40(1)(c)
[162] The same reasoning necessary applies to s 40(1)(c). The Crown has not yet had the opportunity to consider any potential exchange and should be permitted to do so.
Section 40(2) - exemptions to the duty to offer back
[163] Section 40(2)(a) provides an exception to the offer back obligation where the chief executive of LINZ considers that it would be “impracticable, unreasonable or unfair” to offer to sell the land to the original owner. Section 40(2)(b) provides an exception where “there has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held.”
[164] For the same reasons just given, the consideration required by s 40(2) has not, in my view, yet been required. I am unable to accept the submission that either Edmonds or Morrison mean that it is too late for that to occur. It is no doubt for that reason that the defendant did not specifically rely in its pleadings on either of these exemptions from the obligation to offer back, although there is a blanket denial of the pleading that the exemptions do not apply. Again, however, the material before the Court suggests that it is unlikely that the grounds exist for invoking either of them.
Result
[165] It seems to me that declarations should be made in accordance with my conclusions above. The precise terms of those declarations are not immediately clear to me. But their effect should be that:
(a) subject to (c) below, the freeholds in the Dilworth lands (as legally defined) held for the purposes of the Newmarket Viaduct and/or the Auckland-Hamilton motorway are no longer required for that purpose;
(b)the Crown is therefore now required to consider whether offer back is not required by virtue of s 40(1)(b) and (c) and s 40(2); and
(c) any offer back that may ultimately be made to Dilworth would be subject to Dilworth entering into an arrangement with the Crown of the sort entered into with the owners of the Robertson, Westfield and 5
Mahuru Street lands.
[166] I would be grateful if counsel could confer and advise the precise terms of the appropriate declarations.
[167] In my assessment, Dilworth has succeeded more than it has failed. Costs should follow that event on a 2B basis. If they cannot be agreed, brief memoranda
may be filed.
Rebecca Ellis J